Usually when this happens, I just let it go... I don't have time for games, and I have no real way of knowing if the seller really has another offer or just decided to stick it to me for more money. Either way, I'm not playing that game. I went down that path once in my life and never again.
Side Story (if interested):
Went to look at a 1969 Roadrunner, the car was kind of beat up, but did have a 440 in it. I was very interested, test drove the car, etc. Made the seller an offer he agreed, we shook hands. While I was there, another would be buyer showed up. I explained that the car was "sold" but they made an offer anyway. Which started a bidding war, right on the guys lawn for the car I had already made a deal on. I "won" the "bidding" for the car, but now I did not have enough money on me to pay what I had bid. I had to run to the bank to get the difference. I literally gave him the cash I had and drove to the bank 10 minutes away to get the difference. When I arrived back, "my car" was gone. He sold it to the other buyers who while I was gone upped the bid and had cash in hand. I now had cash in hand and called the police on the guy. He did give me my money back and I was told that the best I could try to do is sue him for breach of contract but the cops gave me that MEH look like, good luck. So, with that I took my money and went home, with out the car. After that day, I said never again. I still live by that policy and it has served me well.